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2016 Hot Compliance Areas For Physician Practices

Physician practices should pay attention to the recent reports released by the Department of Justice (DOJ), OIG and other agencies regarding their enforcement actions in 2015 and priorities in 2016. These reports and recent settlements reveal hot compliance areas that physician practices should focus on in 2016.

The following are some of the hot compliance areas in 2016 for physician practices based on recent reports such as the DOJ Health Care Fraud and Abuse Control Program Annual Report for 2015 and settlements and other enforcement actions involving physicians.

Insufficient Documentation

Insufficient documentation of services provided by physicians and their practices is a hot compliance issue in 2016 for several reasons. There has been an increase in the last couple of years of civil False Claims Act (FCA) cases and settlements with allegations of upcoding evaluation and management services (i.e., office visits) by physicians or providing medically unnecessary services based on insufficient documentation.

A surprising recent trend is where physicians do not complete and close their electronic medical record of services to a patient before their practice submits claims to Medicare and other payors. Sometimes, physicians in this scenario may take several weeks or months before completing the EMR for services they have been paid by Medicare or from insurance companies. This scenario based on insufficient documentation raises several potential regulatory issues under the civil FCA and other civil fraud and abuse laws, possibly for both the physician and their practice.

Enforcement Actions Against Physicians

In 2015, the DOJ announced that one of its priorities was to focus on enforcing federal fraud and abuse laws against individuals, and not just corporate entities. In September 2015, the DOJ released the “Yates memo” outlining the importance of individual accountability in DOJ prosecutions. For physicians, the Yates memo is regarded by many to indicate an increased focus on physicians and other healthcare providers in matters involving payment of illegal remuneration violating, for example, the Anti-Kickback Statute and the Stark Law. An example in 2015 was a settlement in which the Columbus Regional Healthcare System and a physician both agreed to pay more than $25 million to settle allegations of violating the civil FCA related to violations of Stark Law and submission of claims at a higher level of service than provided. The physician agreed to pay $425,000 toward this settlement.

To address this hot compliance issue, physicians should review all of their arrangements that may be subject to scrutiny under the Anti-Kickback Statute and Stark Law, such as medical directorships, professional service and employment agreements, consulting agreements, office lease agreements with hospitals, and other compensation arrangements.

Physician Compensation

On the government’s radar continues to be physician compensation arrangements with hospitals, health systems, and their own practices. In 2015, there were several settlements based on compensation paid by hospitals and health systems to employed and contracted physicians in which the government alleged the compensation exceeded the fair market value of their services in violation of the Stark Law. The government also alleged in several cases that Stark Law violations involving physician compensation arrangements was the basis for violations of the civil FCA when hospitals and health systems submitted claims to the Medicare and Medicaid programs.

For example, in September 2015, Adventist Health Care System agreed to pay $115 million to settle civil FCA allegations based on paying bonuses to employee physicians based on the number of tests and procedures they ordered and billed Medicare for its employed physicians professional services using improper coding modifiers.

Physician-Owned Medical Distributorships

Physician ownership in companies that distribute implantable medical devices otherwise known as “PODs”, continues to be a focus of the OIG and other governmental agencies in 2016. In September 2015, the U.S. Senate Finance Committee held a hearing on physician-owned distributorships of medical devices. One consensus from this Senate hearing seemed to be was that POD arrangements create a financial incentive for physician investors to recommend and perform more and more unnecessary surgeries. The OIG also concluded in a study that there was limited information to identify physicians that had an ownership interest in a POD and in a physician-owned hospital. Physicians who are involved in a POD can probably bank on having their ownership interest scrutinized at some point in the near future.

Laboratory Arrangements with Physicians

Another hot compliance area for physicians continues to be arrangements with laboratories. The OIG released a special fraud alert in 2014 regarding laboratory payments to referring physicians and has issued several advisory opinions addressing remuneration offered and paid by laboratories to referring physicians. For example, in August 2015, three New Jersey physicians pleaded guilty to charges related to a test-referral kickback scheme for allegedly entering into sham consulting agreements, sham rental and service agreements, and cash and other inducements for referring patient blood specimens to a laboratory.